The next quality in a currency to be considered is, "That it should be readily convertible into metallic money." I do not propose to discuss this at length. As I have pointed out, our safety lies in the actual daily redemption which arises out of our circulation being generally instead of specially secured. This is the best possible safeguard against suspension of specie payments. The United States National Banking System was created during a suspension of specie payments, and doubtless would never have been heard of but for that fact.

My last point is that placed first by Mr. Palgrave in his discussion with the English bankers: "That the currency should be completely secured." I do not know whether we are to understand also that a note must pass throughout the entire country without discount for any reason, but I include that in the point to be discussed. Now, I contend that it is better for the reasons given, that bank issues should be based for security on the general assets of the bank, with a prior lien to other creditors; and also that taking the world as a whole, such notes will be actually safer because the effect of a system of notes secured by Government bonds - a loan forced by the Government, practically - must sometimes be to produce national bankruptcy, as in the case of the Argentine Republic. Still, I cheerfully admit that the United States National Banking System has taught us that a currency issued by banks may be made to pass over the entire area of a great nation without discount. This is a great quality in currency. To the ordinary individual, who knows and cares little about banking except as it affects the bank note he happens to carry in his pocket, it appears to be the one quality necessary.

In Canada, experience has shown that as long as the notes are a prior lien on the assets of the bank, including the double liability, ultimate loss is scarcely possible - has not at all events occured as yet. To secure their circulation at the close of last year the banks had $10.19 of assets against every dollar of currency. It has been pointed out, however, that the assets are not aggregated against the circulation, and that all banks are not as secure as these figures seem to show. But the security in this respect, in regard to each bank, varies little from the general average, the lowest percentage being 6.18 as against the general average of 10.19. The lowest percentage applies to but two or three small banks, none others falling below about $8 for every dollar of circulation. To this we have added the five per cent. guarantee fund applicable in its entirety to meet the notes of any individual bank.*

* Financial Facilities for Marketing of Farm Products. - By the Bank Act, chapter 29 E. S. 1906, it was provided that in the case of the banks to which the act applied the total amount of the notes in circulation at any time should not exceed the amount of the unimpaired paid-up capital. Amendments to this act made by chapter 7 of the session of the Dominion Parliament of 1908 provide that during the usual season of moving the crops, viz. from October 1 to January 31, the banks may exceed this limit by issuing notes to an amount not exceeding 15 per cent.